$104M Liquidations as Crypto Market Defies SEC Troubles

Crypto markets rally, defying regulatory concerns for top exchanges, signaling bullish strength for major tokens.

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  • Crypto markets have defied regulatory obstacles as tokens have displayed strength.
  • Traders have bounced back from a recent record-breaking liquidation event.
  • Looming are the implications of regulatory troubles for U.S.-based exchanges.

In a display of bullish strength for major tokens, the crypto markets made incremental gains on Tuesday, shrugging off the regulatory challenges faced by Binance and Coinbase, two prominent crypto exchanges renowned for their high trading volumes.

Short Trades Hit Hard as Bitcoin Drives Market Surge

Leading the upward momentum, Bitcoin (BTC) and dogecoin (DOGE) experienced respective increases of 5.8% on Tuesday. Simultaneously, Litecoin (LTC), XRP, and Shiba Inu (SHIB) surged.

As a result, the overall market capitalization of the crypto sphere witnessed a notable rise of 4%, reaching an impressive $1.12 trillion per CoinMarketCap.

Within the last 24 hours, the aforementioned event has sparked a substantial wave of liquidations throughout the market, amounting to $104 million. Notably, the majority of these liquidations were predominantly shorts.

According to data sourced from Coinglass, short trades totaling $72.44 million were swiftly settled during this period, while long transactions accounted for $31.75 million. As of the time of writing, the current trading price for Bitcoin stands at $26,659.

Liquidation Event Followed by Impressive Market Reversal

This bounce served as a reversal for traders who were grappling with the aftermath of a record-breaking liquidation event on Monday. During this event, token-tracked futures products resulted in an impressive total value of over $316 million being liquidated. 

This figure encompassed $292.33 million from long positions and $23.65 million from short positions.

Liquidation occurs when an exchange forcibly terminates a trader’s leveraged position due to either a partial or total loss of the initial margin. It is a consequence of traders failing to meet the margin requirements necessary to sustain a leveraged position, ultimately lacking sufficient funds to maintain the trade.

The market’s reversal can be attributed to traders seemingly brushing off the long-term ramifications of regulatory issues faced by influential U.S.-based exchanges, particularly with regards to certain tokens being classified as securities.

On the Flipside

  • Despite the upward movement in the crypto markets, the regulatory troubles faced by Binance and Coinbase cannot be dismissed, as they raise concerns about the long-term stability of major exchanges.
  • The recent liquidation event, which resulted in the forced closure of leveraged positions, highlights the risks associated with margin trading and the potential for significant losses
  • Classifying certain tokens as securities raises questions about the regulatory oversight and legal implications surrounding their trading and ownership.

Why This Matters

Despite challenges, the continued upward momentum of key tokens and the market’s ability to rebound from liquidation events highlights the growing maturity and stability of cryptocurrencies, instilling a sense of reassurance and optimism among crypto enthusiasts worldwide.

To learn more about the staggering outflows faced by Binance amidst SEC legal action, read here:

Binance Faces Staggering Outflows Following SEC Legal Action

To delve into the implications of SEC vs. Binance condemnation on BUSD and its potential impact on USDT’s classification as a commodity, read here:

Does SEC vs. Binance Condemnation of BUSD Make USDT a Commodity or Security?

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.